Investing.com -- Oil prices rose Wednesday, extending a recent rebound as signs of supply disruptions in the Middle East persisted, ahead of official U.S. crude stockpiles.
By 09:30 ET (14.30 GMT), the U.S. crude futures traded 1.1% higher at $73.05 a barrel and the Brent contract climbed 0.9% to $78.29 a barrel.
Middle East tensions rise
The attacks by Yemen-based Houthis on the international shipping lanes in the southern Red Sea have intensified, with U.S. and British naval forces shooting down 21 drones and missiles on Tuesday, the United States said.
Additionally, Israeli strikes in southern and central Gaza intensified on Wednesday as the war with Hamas continued.
The attacks have seriously disrupted international commerce on the key route between Europe and Asia that accounts for about 15% of the world's shipping traffic.
German shipping group Hapag Lloyd said on Tuesday it would continue to avoid the Suez Canal and around the Cape of Good Hope for security reasons, while its Danish rival Maersk has said it would avoid the route "for the foreseeable future".
API inventories show large draw
Data from the American Petroleum Institute, released on Tuesday, showed that U.S. inventories fell by a larger than expected 5.2 million barrels in the week to January 5, adding to the hefty draw seen in the final week of 2023.
But the API data also showed another week of strong builds in gasoline and distillates inventories, indicating that demand in the world’s largest fuel consumer remained weak. This notion was exacerbated by a massive winter storm battering several parts of the country, further limiting road travel.
U.S. fuel demand has weakened substantially in recent months, largely due to adverse weather during the winter season.
The official inventories from the Energy Information Administration are due later in the session.
“If the EIA’s weekly report confirms a build in distillates, it will be the seventh consecutive week of stock increases, which will further help ease tightness concerns in the middle distillate market,” analysts at ING said, in a note.
The EIA also released its latest Short-Term Energy Outlook on Tuesday, and revised its U.S. output growth for 2024 to 290,000 barrels a day, up from 190,000 barrels a day last month. This would mean U.S, crude oil output averaging 13.21 million barrels a day this year.
Key inflation data due
Oil traders are also awaiting key U.S. inflation data on Thursday, which could factor into the future path of interest rates, while Chinese inflation and trade data on Friday are expected to offer more cues on the world’s largest oil importer.
(Ambar Warrick contributed to this article.)